According to Cointelegraph, the stablecoin supply experienced a significant increase of over $30 billion in the first quarter of 2025, reaching new record levels. This surge occurred despite a 19% decline in the overall cryptocurrency market capitalization. The rise in stablecoin supply reflects a cautious approach by investors who are holding stablecoins as a hedge, likely waiting for market stability or more favorable entry points. The correlation between cryptocurrencies and stocks has intensified as macroeconomic expectations shifted from optimism to concerns over U.S. tariffs.
Industry experts predict that the stablecoin supply could exceed $1 trillion in 2025, potentially serving as a major catalyst for the cryptocurrency market. During a live show on Cointelegraph's Chainreaction, Pakman highlighted the potential for stablecoin adoption to increase dramatically this year, suggesting that the supply could grow from $225 billion to $1 trillion within the calendar year. On March 15, the stablecoin supply surpassed the previous record high of $219 billion, with analysts viewing this growth as a positive indicator for the continuation of the bull cycle.
The Ethereum network has seen a substantial increase in stablecoin activity, with over $3 trillion worth of transactions on the mainnet during the first quarter of the year. The number of unique addresses using stablecoins on Ethereum's mainnet also reached a record high, surpassing 200,000 for the first time in March. Despite this increased blockchain activity, the price of Ether (ETH) fell by over 45% during the same period. This decline is attributed to a combination of broader macroeconomic concerns and specific pressures on Ethereum, such as competition from networks like Solana and the rise of layer-2 protocols.
Some analysts argue that layer-2 solutions may dilute ETH's value by shifting activity off the main chain. However, Juan Pellicer, a senior research analyst at IntoTheBlock, points out that these solutions still rely on Ethereum for security and contribute to its ecosystem by paying fees. He suggests that the decline in ETH is more likely due to market sentiment and uncertainty about Ethereum's ability to capture value from its broader ecosystem. Meanwhile, other analysts see potential positive outcomes from tariff-related investor concerns, with Nansen analysts predicting a 70% chance for crypto markets to bottom by June 2025 as tariff negotiations progress.
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